Veeva Systems Inc.VEEVNYSE
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Operator: Ladies and gentlemen, my name is Colby, and I will be your conference operator today. At this time, I would like to welcome you to the Veeva Systems Inc. Fiscal 2026 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to withdraw your question at any time, simply press star, one again. I'd now like to turn the call over to Gunnar Hansen of Investor Relations. Please go ahead.
Gunnar Hansen: Good afternoon. Welcome to Veeva Systems Inc.'s fiscal 2026 third quarter earnings conference call for the quarter ended October 31, 2025. As a reminder, we posted prepared remarks on Veeva's Investor Relations website just after 1 PM Pacific today. We hope you have had a chance to read them before the call. Today's call will be used primarily for Q&A. With me today for Q&A are Peter Gassner, our Chief Executive Officer, Paul Shawah, EVP Strategy, and Brian Van Wagener, our Chief Financial Officer. During this call, we may make forward-looking statements regarding trends or strategies and the anticipated performance of the business, including guidance regarding future financial results. These forward-looking statements will be based on our current views and expectations and are subject to various risks and uncertainties. Our actual results may differ materially. Please refer to the risks listed in our earnings release and the risk factors included in our most recent filing on Form 10-Q. Forward-looking statements made during the call are being made as of today, November 20, 2025, based on the facts available to us today. If this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Veeva Systems Inc. disclaims any obligation to update or revise any forward-looking statements. We may discuss our guidance on today's call, but we will not provide any further guidance or updates on our performance during the quarter unless we do so in a public forum. On the call, we may also discuss our non-GAAP metrics that we believe aid in the understanding of our financial results. A reconciliation to comparable GAAP metrics can be found in today's earnings release and in the supplemental investor presentation, both of which are available on our website. With that, thank you for joining us, and I'll turn the call over to Peter.
Peter Gassner: Thank you, Gunnar, and welcome everyone to the call. We had an excellent Q3 with strength across the business and results above our guidance. Total revenue in the quarter was $811 million, and non-GAAP operating income was $365 million. Veeva AI is a major initiative for Veeva Systems Inc., and we are making excellent progress. We think Veeva AI can be significant for customers, the industry, and Veeva Systems Inc. We are also executing well and delivering significant innovation across all product areas, including Vault CRM, Crossix, clinical, and safety. We'll now open up the call to your questions.
Operator: Thank you. We will now begin the question and answer session. Your first question comes from the line of Saket Kalia with Barclays. Your line is open.
Saket Kalia: Okay, great. Hey guys, thanks for taking my questions here. And appreciate the prepared remarks that were posted. Brian, maybe I'd love to start with you and maybe just hit one of the points in the prepared remarks kind of head-on. Where I think we said that 14 of 14 top 20 customers are expected to migrate to Vault CRM, and so six are potentially opting for other solutions. Now there's clearly the potential for a win back, as we said, but maybe the first question is, how do you sort of think about the size of the revenue that might be at risk from those six customers on the CRM side? And how do you think about the timeline of that potentially, you know, kind of transitioning?
Brian Van Wagener: Saket, I'm not going to size it, and there is potential for a win back as you said, but maybe taking a step back, CRM is about 20% of total revenue today, down from about 25% two years ago. And that's because other product areas have been growing. In the shorter term, these are multiyear projects that we understand will take a long time to execute. But no impact is expected this year and likely nothing material for next year either. Longer term, we don't expect any impact on our 2030 goals. It's a diverse business, and that means there's a lot of paths to get there, and we're still on track.
Saket Kalia: Got it. Got it. That's super helpful, actually. Peter, maybe for you, on the other side of the business, I'd love to talk about R&D a little bit with you. Of course, one of your competitors talked about winning back a top 20 on the EDC side. I was wondering just since we're all together, can you just talk about that? And maybe just comment on kind of the state of the union in that EDC market in terms of the competitive landscape and your pipeline for further market share gains?
Peter Gassner: Yeah. We did have one customer that said they were gonna go back to their previous provider. Now they're still a broad clinical customer for us, and even in the EDC area. So we'll just have to see how that goes. That's not a trend I see. I think we're still trending very well in clinical, and we have a number of opportunities in the pipeline for EDC both with large sponsors and with CROs because most customers are looking for an integrated solution across clinical operations and clinical data because it just makes sense. That's how you drive efficiency, and efficiency is the name of the game. This particular customer has more of an integrated architecture of their own. For example, they have a custom CTMS solution and a variety of other things. So at this point, it was a sort of a more a decision that was something that we don't see repeating in other places. Now, and also the thing that I'm very excited about is our innovation in clinical, our generation innovation in clinical that we have in the kitchen. That will help the life sciences companies bridge between sponsors and all the way out into clinical research sites. And also really help in patient recruiting over time. So the future is very bright in clinical. This one, honestly, a bit of an aberration.
Operator: Your next question comes from the line of Joe Vruwink with Baird. Your line is open.
Joe Vruwink: Great. Thanks for taking my questions. I wanted to dig a bit more into the CRM topic. Obviously, attrition carries an implication on revenue over time, but I sit here today, and I think commercial subscription revenues have been raised by about $60 million year to date. And then every Vault CRM customer you're retaining now has the opportunity to add service center and marketing automation and Veeva AI. So how should we think about all of that netting together? And, I mean, is it the case where, ultimately, you're netting out and there's an increment here? I think the market is focusing on kind of a lost value to Saket's question, but how to think about the offsets in the equation over the next five years?
Peter Gassner: Yeah. Hey, Joe. So, you're absolutely right. I think there's been a lot of focus on, you know, what there is to lose. I think there's a lot of potential in what we've created, the innovation that we delivered. In some of the areas that you mentioned, like service center and marketing and patient CRM and some of the new products. But then also in AI. So, yes, each customer that we retain, we have the potential to sell a lot of these products and new innovations. And I expect that over time, those customers will adopt more broadly the CRM suite, all the add-ons that are part of that. We're starting to see some of that happen already with some of the customers who've committed to Vault CRM starting to add additional products on. So that's really good. I think we'll also have the potential to win some of these customers. We've talked about that in detail. So, yeah, I feel good about the upside as much as there is some potential attrition from some of the customers that we've got and decided to do something different.
Joe Vruwink: Yeah. And this is Peter. I'll just add in. We've focused on the top 20 because that's how we do some things when we talk to the 400 customers. So it's pretty distributed in what we do. So our CRM business is very healthy, our win rate and our conversion rate is very, very strong and stronger in the smaller market because not the smaller customers, they don't have this appetite for a custom build. It's just not the risk they want to take or what they want to do, and they get a lot of other products to Veeva. Also, on a side note, while we did have 20 of the top 20 customers, 20 of the top 20 were our customers in some fashion for CRM. Two of them were mainly IQVIA customers. So, you know, that's not to say that we're not gonna gain some new customers here. Right? And that can be significant as well. Bottom line is what you should take away is, during the business is healthy, and it is an important part of Veeva Systems Inc., but it's not the major, it's not the largest part of Veeva Systems Inc. anymore. That's for sure.
Joe Vruwink: Okay. That's great color. Thank you both. Maybe one on Veeva AI. You know, you had a few summits within the last quarter. I think you've also been making rounds on forums gathering feedback from your customers. I guess what stood out to you both in terms of, I'll say, reception, but then also maybe any pushback or things where you walk away and you have more, you know, you need to work on, you know, coming out of this initial experience with AI?
Peter Gassner: Well, I think our customers are, you know, they're looking for practical solutions now. Right? They're looking for solutions that can add value, you know, rapidly sort of getting out of this experimentation phase. And they want to use partners where partners can help them. They want to use Microsoft where Microsoft can help them. They want to use Entropic where Entropic can help them. And they know where Veeva Systems Inc. can help them is helping to automate industry-specific applications with AI. That deep domain knowledge and the business process consulting around it. So how do you enable insight generation in CRM through your field team by the use of compliant free text? Okay. That's a very specific thing. How do you dramatically increase the efficiency of safety case processing for adverse events? Okay. That's very specific. So that's what they're looking to us for, and that's what we deliver. That's what we specialize in. In terms of what they would like, they're, you know, just like everybody else. We can, you know, can this be robust and proven and working tomorrow? You know, for all cases. And so they just want us to go faster, but there's really rampant alignment on directions. Veeva Systems Inc. is setting out to do exactly what they want Veeva Systems Inc. to do. We just have to get there. And the customers also have to be able to adopt and do that change management work. Which is, that's not easy either. That's not gonna happen overnight. That's one of our advantages is we have a great business consulting team. So we have that integrated together. Our product team, our selling team, and our business consulting team deliver AI value. That's gonna be more holistic than others, and that's how you're gonna have to do it in industry-specific solutions. The customers are not gonna want to knit together consulting over here and software over there and AI over here. They're not gonna want to do that over the long term.
Operator: Your next question comes from the line of Brian Peterson with Raymond James. Your line is open.
Brian Peterson: Thanks for taking the question. Peter, maybe a follow-up to your last answer. But as we think about AI and how that will impact your products going forward, do you think that we'll see more of a monetization in terms of commercial where we've already kind of seen some of that today, maybe more broadly in software? But I'm curious, what do you think that opportunity could be in R&D where it seems to be more of an opportunity of innovation? Any color on how to think about that opportunity from AI?
Peter Gassner: I think it'll be not exactly, but broadly, you know, even across the board. So, with some areas, a bit more than others. Safety, I think it's a big opportunity to reduce the amount of labor needed also in certain areas of the clinical. In commercial, it's more about insight generation and market advantage. And in terms of, you know, faster insights. In regulatory, it's, again, it's about speed. So the value is probably similar across all areas, but the way it's gonna be implemented is differently. So I'm just gonna focus on insight and agility. Some is gonna focus on, hey, humans don't need to do that particular work anymore.
Brian Peterson: Got it. And maybe, Paul, a follow-up for you. I think there's been some debate broadly on AI and how that may impact sales reps or like how efficient sales reps could be. Like, as you talk to some of your customers, like, how are they thinking about the size of their sales force with the implementation of AI? Like what do you think that looks like going forward? Thanks, guys.
Paul Shawah: I mean, we have seen some of the reductions that have played out over the past couple of years that we have talked about. We've kind of predicted roughly about 10%. It ended up being a little bit less than that. The way to think about it is the customers that they're calling on, the HCPs, the number of doctors hasn't fundamentally changed. You still need people. You need a base level of sales reps to build those relationships, cover those doctors, deliver the information, the service that they need. So I think the industry is cautious and thoughtful about making significant changes or adjustments. So I think there is a lot of potential for productivity gains and effectiveness gains, but I think it will likely be stable. At least for the next couple of years. We're not hearing of any, you know, AI-related reductions. It's more related to specific, you know, ramping up for launches or ramping down because of a pipeline challenge. But I think that's normal course of business.
Operator: Your next question comes from the line of Alexey Bogalis with JPMorgan. Your line is open.
Alexey Bogalis: Hello, everyone. Thank you for letting me ask a question. Peter, I have my first question. Maybe I appreciate the comments you made in prepared remarks that you have not observed material change to customer buying behaviors, but could you double click on the demand environment and financial health of the pharma end market?
Peter Gassner: Right. Yeah. So the industry overall is pretty healthy. We've had a bit of chaos in the environment with tariffs and other things and certainly conflict, but the industry has gotten, I guess, used to that. And so I'm seeing no changes in the end market. Then the science is still rapidly evolving. Right? So there are many, many uncured diseases that are seriously affecting people's quality of life. You know. And, you know, the death of a child or a young parent. Right? That happens. And the industry is working hard to be able to cure some of those things. And there's demand for that. So I'm pretty optimistic about the industry overall, and pretty steady right now.
Alexey Bogalis: Thank you, Peter. And a very quick follow-up on the comments. First, congrats with another commitment for Vault CRM. So you suggested that you're looking to win another four out of the remaining six undecided. Do you have any verbal indications from those clients already?
Peter Gassner: No. I, you know, I wouldn't get—we'll probably let you know when we've been notified. We'll let you know in general, but we won't get into the, you know, fine-tune of that. Okay. You know, we have some things that we think and we have some things that we think we think, but, you know, we won't get any more fine-grained than that.
Operator: Your next question comes from the line of Ken Wong with Oppenheimer. Your line is open.
Ken Wong: Thanks for taking my question. This first one for Paul. Crossix again called out as a pocket of strength. Any way to help put a little context around it? Was that consistent with Q2? Just starting to normalize, level off? How should we think about the kind of the Crossix dynamic?
Paul Shawah: Yeah. It was in line with our expectations. You've seen nice outperformance of Crossix in the first couple of quarters of the year, and we expected that to continue to play out. The measurement business is very stable. And we've continued to perform well there. And then audiences, which can be a little bit more variable, has also delivered really nicely. So yes, Crossix continues to be a nice growth driver. And we expect it to be that. Although there may be some variability, we expect that to be a nice driver over the next several years.
Ken Wong: Perfect. And then Brian, 115 customers live on Vault CRM, including, you know, I think some top twenties, kind of in the motions. How should we think about when you might see some gross margin tailwind as you start to work off of the Salesforce royalties? What's the right time frame for something like that?
Brian Van Wagener: There are some puts and takes in the short to midterm there, Ken. So you recall that in the next couple of years, as we have other customers going through their migration, there are some customers where we have both the Veeva CRM on Salesforce royalties and the AWS hosting costs. So we'll see some customers rolling off, some that have a mix. So I would say a modest headwind actually over the next year or two. But pretty immaterial in the grand scheme of things. You can see that the gross margins on subscriptions were essentially stable, slightly up year over year. So not a significant impact over the next couple of years, and then it starts to roll off a few years from now.
Operator: Your next question comes from Stan Berenshteyn with Wells Fargo Securities LLC. Your line is open.
Stan Berenshteyn: Yes, hi. Thanks for taking my questions. Well, first, a follow-up on Crossix. I'm just curious, given the regulatory focus on direct-to-consumer advertising, have you seen any changes in where audience targeting is happening on the platforms? Is it changing at all?
Peter Gassner: Yeah. Stan, I would say—and I can take that one for her. I think the thing that when I was listening about Crossix to know is that digital overall, digital marketing spending is going up. Both in consumer and in HCP because there's better digital avenues to reach people. And you're seeing that with things like open evidence and proximity's new AI offering. Right? So there's increasing effective use of that channel. And then with Crossix specifically, what's going on is as that channel gets more important, measurement and audiences and optimization get more and more important. That's one thing. And Crossix is becoming more of a standard. So there's really a compounding effect of the excellence that we're developing in Crossix. You know, Crossix will be, you know, that's gonna be a well-growing business for us. You know, you should think of that as a well-growing business for the foreseeable future. You know, three, four, five years type of thing. This is—we put some serious innovation in Crossix over the past years. We've invested heavily in the data network. Because that's a data network that we share with Compass. Compass and Crossix share that data network. So it's—they're just becoming more important, not less important. The other—you'll see maybe regulations around consumer TV ads. But overall, digital is growing. It's a very effective means to meet people, and you need to measure and optimize that. And that's what Crossix does.
Stan Berenshteyn: Very helpful. Thank you. And maybe a quick follow-up on your sales pipeline. I'm curious, a couple of comments here. First, I think historically, Peter, you called out safety and regulatory as potentially having a little bit less of a predictable sales cycle, maybe a bit longer than usual. Any changes there from customers in the sales pipeline on those products? And then maybe related to this, I'm just curious are you seeing anything coming from the IQVIA partnership? Any clients potentially coming through that pipeline? Thanks.
Peter Gassner: Yeah. For safety and regulatory, especially in the large companies. Those are usually long sales cycles. Customers know they're making ten-year decisions plus. So these are very serious ones. So I don't see any change there. We have a lot of momentum in the safety area. That's one thing I would say. And then the AI and safety can kind of be a game changer as well. So that might drive a little faster adoption there. And in terms of IQVIA, it's been great having that partnership. So, you know, revenue impact takes a while to see on these partnerships. But the positive customer experience is really heartening. I think it's, you know, giving IQVIA the current a little spring in their step, this partnership with Veeva Systems Inc. is certainly giving Veeva Systems Inc. a spring in our step. This partnership with IQVIA is a very positive macro-level trend for the business, especially on the commercial side. Two big macro-level positive trends for us on the commercial side, or three, are this increasing investment in digital and AI. You see Crossix taking advantage of that, and you'll see other things from Veeva Systems Inc. over time. Right? Where a lot of our revenue and our future things will come as it relates to digital. The IQVIA partnership, making the interop more easier. That will help our data business. That will help our software business. And then the freedom that we're getting to develop our solutions without having to worry about the Salesforce platform and the limitations. All of these things are really gonna be unleashing us on the commercial side. And then for IQVIA on the clinical side, that's been great too. Just more customer confidence in Veeva Systems Inc. and IQVIA can bring solutions to our joint customers.
Operator: Your next question comes from the line of Dylan Becker with William Blair. Your line is open.
Dylan Becker: Hey, gentlemen. I appreciate it. Maybe, Peter, starting with you too, if we kind of think about the service strength you entered at this as it relates to business consulting, but maybe the need for change management that you're seeing and kind of the strong services outlook, how that or how you maybe think about the implications of that maybe driving more kind of wall-to-wall broad-based platform in the future, the role that business consulting can play in driving kind of the broader platform momentum over time, whether that's commercial or R&D?
Peter Gassner: Yeah. If you look at Veeva Systems Inc. at a very high level, you know, where we started, pharmaceutical CRM. Built on salesforce.com. Myself, and my neighbor in our front yard. You know, my, you know, our front yard, which we joined. So there's two people and one product. Right? We have 7,000 people and a lot of products. The way—and now we have software that basically reports directly to me. We have the data business. Reports to me. We have a consulting business. And that consulting business reports to me. So that's how we're building the industry cloud for life sciences. These three working together, which is a lot of skills we have and capabilities we have to have in Veeva Systems Inc. We have to be an excellent consulting company. We have to be an excellent data company. We have to be an excellent software company. And we have to manage the interplay of those three things. But that's what our customers want. They would rather have Veeva Systems Inc. be the general contractor and fit this together. Sometimes I would talk to customers and I would say, well, if Veeva Systems Inc. has 100 things, the nice thing is you might buy one thing today, but you can be assured that that one thing five years from now will fit into all the other Veeva Systems Inc. things that you have. Versus if you buy 100 things from 100 different vendors, those 100 things are moving in 100 different directions, and you'll be replacing pieces and parts forever. So that's what we're bringing, a more comprehensive solution across data software and the consulting, the operating models. So that fits together for life sciences. I guess that's why I think sometimes people underestimate what we'll end up doing for life sciences. It's a pretty significant thing, and it's not anything that any other vendor has ever tried to do for an industry so far. So that's why we're pretty excited about what we're doing.
Dylan Becker: Certainly. That makes sense. And maybe you just got teased, this, and so I'd be remiss if I didn't kind of double click on the momentum and safety. I know you called out another top 20 customer, and I think another top 20 go live there alongside the fact that it's maybe the opportunity that's most ripe for labor disruption, I guess. I know these are still long-term decisions, but how do you think about kind of the innovation you're delivering to the safety space and how met with receptivity from a decisioning perspective as you have kind of more of these proof points and validation points at market? Thank you.
Peter Gassner: I think safety is really excited about our architecture and how we're doing not only the core safety processing, but the AI that sits on top of that. And the analytics go along with it, the analytical application. So people think that's good. People are very hesitant to change their safety systems. It's such a core system, and it's been so complex. So we're still in the early customer phase of that. I'm hopeful that in, you know, we'll get into the middle majority phase here in a couple of years, and then we'll have the late adopter phase. I'm just very optimistic on it. But gosh, people don't change these things very, very fast. They just don't. Because it's such a critical area, and there's not a lot of push from above the safety teams. Because it's such a critical area, and they've got it. So, you know, we just have to wait for the right time, and then every project has to be successful on that. That's really what we're focused on. It's probably surprising. It would be surprising to many people how complex a global drug safety system is. When you're coordinating with all the health authorities around the world, all the constantly changing regulations. I mean, just to give you an example, there's a lot of special functionality for vaccines. That you need and over-the-counter medicines, you know, each therapeutic area has its own things, and each country has its own thing. So it's complex. We spent, I guess, it's getting close to, what, eight years or so building this thing now. So, that's a real competitive moat.
Operator: Your next question comes from Tyler Radke with Citi. Your line is open.
Tyler Radke: Yes. Thank you very much for taking the question. Peter, just going back to the top CRM, 20 customers there. You referenced that this was, like, kind of a unique customer kind of one-off example. I was wondering if you could just sort of elaborate on it. Is this something specific to their negotiations or discounts that they'd be getting with another vendor? If you could just sort of talk through that and then maybe the time frame on when you think you could win them back.
Peter Gassner: Yeah. I think, you know, when we say customers, specific situations in a very large, there will be individual people, and there'll be dynamics in between people. And there'll be how those people feel and where their cultural alignment is. You know? Sometimes logic is only part of it. So that's what I was referring to. There's no particular pattern there. It's just customer-specific, you know, humans. Right? And some, like, would just say, I just want to try something new. Right? I just want to try something new. We may think that's logical or not logical. Right? Some people want to go with something that's proven. And some people would just want to try something new. So you got all those kinds of dynamics going on. Then in terms of the win backs, you know, you never know when that happens. Usually, it comes with, honestly, executive turnover. Right? An executive turnover. Somebody has a different idea. Also, it can come sometimes, you know, vendor not delivering. You know, the current solution not delivering or project failure, and then it can come in a hurry. It might come in one year. It might come in ten years. You know? But in general, these will be more of a custom build type of thing with Salesforce. And those, you know, on the outside, those could have a ten-year lifespan. But they might only have a one-year lifespan. So just have to see how that goes. I do have a lot of confidence that the building is really—it hasn't proven to be the way forward for most things over the years. And so that's what gives me a lot of comfort. But, again, I don't want to over-index on that. We're just talking about these top twenties for transparency. Our CRM business is very healthy. You know, we're winning some top twenties that we didn't have. We're losing some that we had, and we may win them back. But overall, you know, the business is good.
Tyler Radke: Yeah. And for sure, over 100 customers live is a good proof point. Maybe, Brian, just on the margin side, it looks like hiring ticked up again a little bit this quarter relative to kind of the trends we saw last year. Help us just understand, you know, where those heads are focused and then anything you would call out in terms of how to think about margin expansion into next year?
Brian Van Wagener: Yes, absolutely. So the two main areas that we're hiring are in our product and then in our services team. You heard us speak to some of the services hiring coming out of Q2 with the large class for our college development program. So we're continuing to invest in the services business, both core professional services and business consulting, continuing to invest in the product. And there was some impact on the services margin in particular in this quarter. But we're really pleased with the overall performance of the business. And as those new hires start to ramp and build the projects, that will wind itself down over time.
Operator: Your next question comes from the line of Charles Rhyee with TD Cowen. Your line is open.
Charles Rhyee: Yeah. Thanks for taking the question. Peter, obviously, we're continuing to, you know, get these wins in Development Cloud. We started start-up and study training. For these clients, you know, I guess in Development Cloud, among the top 20 biopharma, what's the average number of these Development Cloud products do they have on average? And where would you see as the tipping point? Because if I recall a couple of years back, you know, there's an announcement that Merck was gonna move to sort of a full deep environment over time. Just to get a sense of what you would consider someone being sort of a full Veeva on the development on the R&D side? Like, what does that look like?
Peter Gassner: Yeah. And as it relates to Merck, there was a strategic partnership we announced. There was not really that they would use Veeva Systems Inc. everywhere, but a strategic partnership that we announced. Now, in terms of Development Cloud, I, you know, I don't have any particular figures to share with you in terms of percentages or number of applications. It depends on the area. So in the ETMF area, we actually have 20 out of the top 20. Now that have selected us. That's really important. We can use that standardization to drive AI and industry standardization and help the industry and help the regulators. That's, you know, that's going on there. And then newer areas such as RTSM for the randomization and trial supplies management. We don't have any top 20 that has selected us for an enterprise standard yet. Or an ECOA, you know, nobody yet because those are quite new and safety, just a few. So it just depends. We have a lot of, you know, we have definitely more opportunities to go in Development Cloud than we've consumed now. So surprisingly, it's still in the early days of Development Cloud for two reasons. One is these are super important systems that take time. You can't change them out all at once. You put them in most of them, and you keep them for fifteen years. The other is we're adding more applications. So RTSM is new. ECOA is new. The whole area of quality control limbs is brand new. We just had our first early adopter in the top 20 for two manufacturing sites. So it's a lot more to do. I guess it's still early, surprisingly. These things take time.
Charles Rhyee: That's helpful. Thank you. And just a follow-up there. Someone had asked earlier about, you know, one of your competitors kind of won back an EDC client, but, you know, what does the overall competitive landscape look like currently? Because it seems like one of your other main competitors in development in R&D seems to be focused a little bit elsewhere in healthcare. Just curious how you're seeing the overall competitive landscape kind of shaping up currently. Thanks.
Peter Gassner: Yeah. We certainly have competitors in each area. You know, there's competitors specific to randomization and trial supply management. There's competitors specific to regulatory and clinical operations and EDC. But we don't really have a competitor that's trying to do an overall Development Cloud like we're doing. So I feel like we just have to execute really well, excellence in each area, concentrate on our integrations, and leverage our account partnership. So we have to compete with ourselves. To push ourselves for excellence, for humbleness, for great hiring. The advantage that we have is we have a core platform that's used across all these applications. So we can really invest in the platform. And there's commonality in the platform. And we have first-mover advantage. We had this idea back in early 2012. And, you know, and so you have a lot of core capabilities around it. If you are a competition as ourselves, we have to execute and continue to improve and stay humble.
Operator: Ladies and gentlemen, due to time allotted for questions, please ask to limit yourself to one question. Thank you. Next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open.
Craig Hettenbach: Yes. Thank you. On Crossix, before the acceleration this year, I think the business has grown roughly kind of low to mid-teens. You talked about some of the drivers that are driving growth above that. Do you think in the next couple of years it reverts back to kind of that mid-teens level? Or do you think some of these drivers can kind of sustain stronger growth in the next few years?
Brian Van Wagener: Hey, Craig. This is Brian. Overall, we are really pleased with the progress of Crossix. Growth has been very healthy there for the full year to date. It's a large market with a long runway for growth. Both in the measurement business and in the Audiences business. We're not going to break out a specific long-range growth rate for each to grow, and it's executing very well right now. Product area, but we think there's still plenty of room for that business.
Operator: Your next question comes from the line of David Hynes with Canaccord Genuity. Your line is open.
David Hynes: Hey, guys. Thank you for taking the question. Paul, maybe you could talk a little bit about how you're balancing go-to-market initiatives on the commercial side of the business and maybe how you see it evolving over time. I mean, obviously, Crossix is doing really well. I have to think CRM migration is kind of front and center of your mind right now, especially as kind of these last top twenties make their decision. You tempered expectations around cross-sell during this migration period, but you have a ton of new products. Right? Service center, campaign manager, patient CRM. Like, when do you lean in on those products a little bit more with the top 20? And just maybe talk about kind of how you balance all this and see it evolving over time.
Paul Shawah: Yeah. David, it's a good question. And maybe higher level, we have dedicated teams in each of these areas. Dedicated strategy teams and product teams, and they're all focused on their different areas. So they're able to move, advance the product forward, advance customer discussions forward. In some cases, there's dedicated sales teams. So it's not, you know, we don't necessarily have to kind of just focus on one thing and not focus on something else. We're able to kind of focus in multiple areas. But you're correct. Right? The migration thing is the transition of customers over to Vault CRM. That is creating, in some cases, it's slowing things down. In other cases, it's actually creating opportunities for us. We're seeing as customers are making that decision, they're looking at their data. And maybe it's time that we switch out our customer reference data because Veeva Systems Inc. has better data in this area or their master data management with network and Nitro are now becoming opportunities. As they're going through the migration, they're thinking about, they're thinking more broadly. Because there are more pieces of trying to get to broader efficiencies, and they're able to get there as they adopt commercial cloud. We're able to focus in multiple areas. It does create openings for us to continue to expand in each of these areas. And, as you heard, there's kind of some stable businesses, and there are other areas that are growing a little bit faster. We're going to continue to drive and push in each area. Because we can add a lot of value when they put all these pieces together.
Operator: Your next question comes from the line of Andrew DeGasperi with BNP Paribas. Your line is open.
Andrew DeGasperi: Thanks for taking my question. Wanted to ask the top 20 CRM question. Different way. Particular, how it relates to your 2030 targets. I know you mentioned that it doesn't impact your capability to reach it. I was just wondering why is that the case? Is it because you either the sort of low expectations is mostly tied to a very small number of clients that have decided to go a different way, like one or two? Or is it a factor of you have these other Vault CRM customers that are smaller, the 100 plus that you've listed that could be also contributing and offsetting some of that potential weakness you would see in that business?
Brian Van Wagener: Andrew, this is Brian. I'll take this one. When stepping back, there are a few things, some of which you touched on. One is that the top 20 is certainly not the entirety of the CRM. And you heard Peter speak to the fact that the overall business is very healthy. Got enterprise customers, SMB customers. We still expect to win. The vast majority of customers are to retain that. We will have the opportunity to win some of these customers back, and we think that's likely to come through. Then the third and probably the biggest one is that this is a diverse business. It's not only a CRM business. CRM Suite is about 20% of total revenue today. So the other 80% is continuing to perform really well. It's growing well. There were always multiple paths to 2030. And so when we step back and look at the progress that we're making, we feel very good about the progress and how we're tracking out to the 2030 goals.
Peter Gassner: Yeah. That way to think about it is the commercial is a part of the business. Right? Our total addressable market and clinical is even a bit bigger than that. And then there's quality and safety and manufacturing and other things. And then inside of the commercial, the CRM suite is a part of that. It's certainly not the majority of it. It's the minority of the commercial area. And we have to see how things, you know, play out. It's not unforeseen that Crossix can be as big as the whole CRM suite by 2030 as well. Right? That's, you know, it's a good business, the CRM, and it's a strong business for us, but the CRM suite itself and the number of field ops and things, that's not a growing business. That's kind of a stable business. That's where Veeva Systems Inc. started, but it's not our determinant at all for 2030.
Operator: Your next question comes from Jeff Garro with Stephens. Your line is open.
Jeff Garro: Yes, good afternoon. Thanks for taking the question. Want to ask about the comments in the prepared remarks on the Quality Cloud opportunity expanding. Is that expansion by reaching new customer types or more of a reference to product expansion? Just any further remarks on specific drivers of your success in quality and with labs and CDMOs would be helpful. Thanks.
Peter Gassner: Yeah. I'll take that one. This is Peter. It's, yeah. Quality is one of these areas where we can reach a lot of customers, a lot of different customers. CDMOs, you know, other regulated, highly regulated services, industries that are close to life sciences. Our success has been we have three main core products all on a common platform. We have the quality documentation, which is used mainly in test. Manufacturing for Engineering Europe. Standard operating procedures and your changes around that, your quality management system for, you know, deviations and kappas, etcetera, and your GXP training. Your validated training environment. So we're the only vendor that has all three all in a common platform. So that's what's really driving a lot of the growth. In addition, we have some new products there, batch release and computer systems validation. And we're very excited about LINZ. We announced that early customer in LEMS, the laboratory information management that's used to test the medicine as it's being manufactured. And that's a growth area because there's, you know, new manufacturing plants being built. Because of a variety of reasons, let alone, you know, political reasons, etcetera. So new manufacturing plants being built, and the medicine and the manufacturing of these medicines is becoming more expensive and more complicated. And there are two main solutions used out in that area, and they're both, you know, on-premise hosted solutions that are not modern. Critically important, but not modern. So we have a real greenfield opportunity there. If you look at life sciences, they will generally, they will research and find a molecule. They will run clinical trials. They will commercialize the product. But along the way, before they put that medicine even in the first human, they have to manufacture it. First in a small volume, and then in a large volume. And so that manufacturing area is critically important. You're manufacturing something that's gonna be either ingested by a human or put right into their bloodstream. So it's super important how you do that. So that's a great growing area for us. Quality in the manufacturing space.
Operator: Your next question comes from Jailendra Singh with Truist Securities. Your line is open.
Jailendra Singh: Thank you and thanks for taking my questions. I want to follow-up on the MAX environment question earlier. You did note in the prepared remarks that the guidance raise is driven by improved visibility into Q4. Can you elaborate on that? Is it stronger renewal activity, up momentum, or new logo wins? And related to that, we have seen some good clarity for the pharma industry in recent months with all the discussion with the administration. Do you get a sense based on your conversation that we could see a potential up in client buying trends in the coming year or so?
Brian Van Wagener: Hey, Jailendra, this is Brian. I'll take this one. So, I think really good execution coming out of Q3. We had some earlier timing of deal closure than we expected that contributed to some of the outperformance in the quarter and the raise in Q4 and therefore for the full year. Overall, I think broad strength across the business. On the commercial side, we saw Crossix continue to perform well, but also the SMB commercial side had stronger performance in the other areas of our commercial business. Strong performance in R&D, which tends to be more predictable, but we saw strong performance in R&D. And then strong performance as well in our services business and really across professional services and business consulting. So we're very pleased with the momentum coming out of Q3 and what we see coming into the quarter. I think beyond that, we'll factor that into our guidance for next year, which we'll release following the fourth quarter here. But feeling good about the execution of the business as we enter the final quarter of the year.
Operator: Your next question comes from Steven Valiquette with Mizuho Securities. Your line is open.
Steven Valiquette: Thanks for taking the question. So I guess for me, my primary question was also going to be on your comments about the unique customer-specific factors driving a few less of the Vault CRM wins. See you talked about that already. But really my quick follow-up question is, since it sounds like it really is truly scattered across these customer-specific factors, are there any learnings for Veeva Systems Inc. from all of this, either on, you know, Vault, CRM, product design or on pricing or it even not really change anything going forward? On the go-to-market strategies just in the back of all those? Thanks.
Peter Gassner: It's a good question on the learnings. Yeah. We did, you know, look through that. No. I think, there's, you know, we did things the way we wanted to do things with customer success in mind, and we've gotten our top twenties live. And, you know, I guess we thought more customers would, you know, 90% of customers maybe would put weight on that, and some customers didn't. They just, you know, it's they just wanted to try something new. So no particular learning. I would say there's a lot of enthusiasm around the Veeva Systems Inc. team, product and services team because, you know, it's kind of distracting to try to resell all those top 20 customers all at once, right, in a very short period time, and you're competing with a product that doesn't really exist yet and a lot of promises and things like that. That's kind of distracting a little bit, but we're largely through that. So now, you know, we used to have 18 out of the top 20. Now we're maybe gonna have 14 or so. And now it's back to business as usual and really focusing on those customer success. But with a difference. Now we are entering the age of AI. You know, probabilistic computing. To really drive and change what a CRM system can do. So that's giving people a lot of excitement. This, you know, the Vault CRM of '26 and '27 and '28, that's not gonna be, like, the CRM of 2022 and 2023. So that's where the real excitement is.
Operator: Your next question comes from Gabriela Borges with Goldman Sachs. Your line is open.
Gabriela Borges: Hi, good afternoon. Thank you. For Paul and Peter, I wanted to get your thoughts on the risk that the CRM market becomes more competitive over time. For example, could the large competitor that has six out of the top 20, could they use that as a beachhead to expand their presence with time with the road map that will improve over time? Or, for example, the 14 that have committed to Veeva Systems Inc., could they be thinking about the structure of the ecosystem changing? So for example, a year from now or three years from now, could they consider competition? So maybe just give us a little bit of a sense of your conviction on long term and how Veeva Systems Inc. can continue to have the dominant position that it has in the event that the competitive environment does change more structurally on the commercial side. Thank you.
Paul Shawah: Yeah. So, as we think about other areas in commercial, there are generally separate decisions from CRM. You know, the people who make decisions around Vault CRM are generally different than commercial content and Crossix data cloud. We've actually done something unique, and we've connected all of those pieces together. One of the reasons we moved to Vault CRM is to make it feel more like Development Cloud. So when you buy into Veeva Systems Inc., you have these really mission-critical areas. Crossix. You're seeing how important that is. Commercial content, that we have all plumbed up together. So we create a lot of value. So I think the customers that do decide to buy into Vault and Veeva Systems Inc. will get additional value. The synergy of having everything on a common platform where they know everything is just gonna work together. We've made a long-term commitment to life sciences. I think what we're seeing Salesforce is, you know, kind of just entering. They have a very new product in the CRM space. They don't have everything that we've talked about. All of the other software products, commercial content, Crossix business, all of the data assets, what Peter has talked about earlier with business consulting. So we're building just something that's fundamentally very different than what Salesforce is trying to do. I think that's a very significant competitive advantage for us, and I think that's why we feel really confident about our long-term market position. Because, one, we're gonna have a better CRM and a CRM suite area, but it's all gonna be connected together. And building the industry cloud, bringing all of those pieces together. So feel good about the competitive position. I'm happy with where it's shaking out. Obviously, you love to win every customer. But we're executing well, really across all the commercial.
Operator: Your next question comes from Tucker Rumors with Jefferies. Your line is open.
Tucker Rumors: Hi. Thanks for taking my question. So my question revolves around the development of AI agents in the clinical suite. I just want to get a sense of how soon you think you could develop some clinical AI agent, for example, you can give, and how can Veeva Systems Inc. monetize that in the future? Thank you.
Peter Gassner: Yeah. We have, we've published our road map around our agents. We're gonna have agents in literally all of our software applications as we get through 2026. We started this year. We'll have them in commercial. And CRM and commercial content. Next year, in roughly the first quarter, April, it'll be in safety and quality. And then through the end of the year, we'll have agents in clinical operations. And then, by the end of the year, clinical data management. We think it's one of those potentially transformative areas in clinicals. It's our largest single opportunity, the clinical business. There's a lot of potential to just streamline a lot of core processes, ePMF, you know, when you just intake a document and scanning through that, making sense of that with an agent, as an example. Just replacing core human labor with agents. So a lot of potential for productivity. That's just one example, but I think we see that pretty consistently across the broader clinical area. So super excited about AI because we've actually accelerated our agent road map. And we'll have it in, like I said, virtually every application area as we get through 2026.
Operator: Your next question comes from the line of David Larsen with BTIG. Your line is open.
David Larsen: Hi. Just going back to these top 20 biopharma clients. Can you maybe—I just have a tough time believing, like, with your R&D capabilities, if you have 20 of the top 20 on your electronic trial master file platform, that's where all of the R&D flows out of. Like, did these four already sign with Salesforce? Did they just sort of verbally tell you they're gonna go with Salesforce? How sort of final are those decisions? And then we keep saying, may win them back. Like, how would that work? Is there a trial period they have with Salesforce? Thanks very much.
Peter Gassner: I'll take that one. So in terms of the—this is around the CRM product. Right? We announced the Salesforce ones that particularly around our CRM product. And, if I just reiterate, that's about 20% of our business today. Two years ago, it was about 25% of it. We're not gonna give a direction of what percentage of our business it would be in 2030, but you could, you know, that's gonna be significantly less than 20%. So it's a minor part of our business that's nothing to do with our clinical business. Right? Nothing to do with our clinical business. And then in terms of the win back, how does that work? Well, you know, when you roll out a pharmaceutical CRM system, you'll do it by region, and might have a failure in one of those implementations. So you might say, well, okay. I'm not gonna use Salesforce in that other region. I'll go over to Veeva Systems Inc. Or you might have a failure in your first region, and you're gonna say, well, I'll cancel that overall. Or you might have an executive change. And they might have a different idea of what they want to do. But, also, you might run with that system, sort of a more of a custom build system for three years, five years, seven years, and then you feel like, okay. That's run at the end of the life. We have a custom system, and the industry has moved on. And we want to move back onto a more industry-standard system. Because with Salesforce, very open platforms, so the IT team sometimes can build exactly what they want. And the system integrators kind of feed into that as well. So you end up with a very custom system. So it's not—this top 20 things had nothing to do with the bulk of our business, clinical. And the win backs happen over time. As they naturally would.
Operator: Your next question comes from Sean Dodge with BMO Capital Markets. Your line is open.
Sean Dodge: Maybe just on the Veeva basics. Offering you rolled out, was about, I think, a little over a year back. You had a release a few weeks ago that there are about 100 clients that have selected that. I guess just wondering how we should think about sizing the longer-run opportunity for Veeva Systems Inc. in that part of the end market. Obviously, R&D budgets for small biotech are small, on the other hand, are a lot of them. So just maybe kind of thinking about does that have the potential to be a real needle mover for Veeva Systems Inc. at some point here soon?
Peter Gassner: It's a very important thing for Veeva Systems Inc. because it helps the smaller end of the life sciences industry. And that's critical. So, for example, it's a very important thing in the clinical side for our larger. Because when they need to evaluate an acquisition, and that acquisition is using Veeva Basics in the clinical area. They're gonna be much more organized and much easier to automate. So Vault Basics helps the Veeva Basics helps the industry grow overall. That's gonna help Veeva Systems Inc. In terms of how significant it can be, it's not gonna be the significant part of our revenue driver. It's, you know, it's a part of the overall ecosystem. We have 100 customers now. It's—I don't know where that ends up. But it's not impossible that we have a thousand customers on basics over time of the different offerings. So, you know, it's a great business and more than anything, it's the right thing to do. Giving a professional solution to these small biotechs that in the unlikely event that their business really takes off and their molecule really takes off, and they're gonna be the next Pfizer. Okay. They don't have to change systems. They can just graduate from basics right in place and get enterprise Veeva Systems Inc. So super excited about the innovation that's happening in Veeva basics.
Operator: Thank you. No further questions in queue, I'd like to turn the conference back over to the CEO, Peter Gassner, for closing remarks.
Peter Gassner: Thank you, everyone, for joining the call today, and thank you to our customers for your continued partnership and to the Veeva Systems Inc. team for your outstanding work in the quarter. Thank you.
Operator: This concludes today's conference call. You may now disconnect.